Which one of the following is true according to generally accepted accounting principles?
A) Depreciation is recorded based on the market value principle.
B) Income is recorded based on the realization principle.
C) Costs are recorded based on the realization principle.
D) Depreciation is recorded based on the recognition principle.
E) Costs of goods sold are recorded based on the recognition principle.

Question

Quizplus · Accepted Answer

According to generally accepted accounting principles, income should be recorded based on the realization principle, which means revenue is recognized when earned, and expenses are recognized when incurred. Depreciation is recorded based on the matching principle, and costs are also recorded based on the matching principle. However, costs of goods sold are recorded based on the recognition principle, which means they are recognized when the goods are sold, regardless of when they were produced or purchased.

Which One of the Following Is True According to Generally